ORDER
Krishna Kumar, Member (J)
1. Heard both sides. The main allegation against the appellant is gross under-valuation while clearing the goods by M/s Tekson Ltd. to M/s Teksons Cooling Systems Pvt. Ltd., which were cleared without filing the price declaration under Rule 173-C(1) of the Central Excise Rules, 1944, and without disclosing that M/s Teksons Cooling Systems Pvt. Ltd., Jamshedpur, is the subsidiary company of M/s Tekson Ltd., Thane. The issue, therefore, arises for consideration is as to whether M/s Tekson Ltd. is related person of M/s Teksons Cooling systems Pvt. Ltd. in terms of Section 4 (4)(c) of the Central Excise Act, 1944 and were required to pay Central Excise duty on value determined as per Section 4 (1)(b) of Central Excise Act, 1944 read with Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975.
2. For the purpose of reference Section 4 (1) (a), 4 (1) (b), 4 (4)(c) of Central Excise Act, 1944, and Rule 6 (b) (ii) and Rule 6 (c) (ii) of Central Excise Valuation Rules, 1975 are reproduced as under:
Section 4 (1) (a) “the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the case of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is sole consideration for the same.”
Section 4 (1) (b) “where the normal price of such goods is not ascertainable for the reason, that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed.” Relied.
Section 4 (4) (c) “related person” means a person who is so associated/ with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company/a relative and a distributor of the assessee, and any sub-distributor of such distributor.” Relied.
Explanation, – In this clause “holding company” subsidiary company” and relative” have the same meanings as in the Companies Act, 1956 (1 of 1956);
Rule 6 (b) (ii) “if the value cannot be determined under Sub-clause (1), on the cost of production or manufacture including profits, if any, which the assessee could have normally earned on the sale of such goods.” Relied.
Rule 6 (c) (ii) “in case where a related person does not sell the goods but uses or consumes such goods in the production or manufacture of other articles, in the manner specified in Clause (b) of this rule.”
Section 4 of Company Act, 1956. defines holding and subsidiary company as under:
“4. Meaning of “Holding Company” and “Subsidiary Company” (i) For the purpose of this Act, the company shall, subject to provisions of Sub-section (3), be deemed to be subsidiary of another if, but only if–
(a) That other controls the composition of its board of director, or
(b) That other–
(i) where the first mentioned company is an existing company in respect of which the holders of preference shares issued before the commencement of this Act have the same voting rights in all respect a holder of equity share, exercise or controls more than half of the total voting power of such company,
(ii) where the first mentioned company is any other company, hold more than half in nominal value of its Equity share capital, or
(c) The first mentioned company is a subsidiary of any company which is that others subsidiary.”
3. On going through the balance sheets for the year 1994-1995 to 1999-2000 of M/s Tekson Ltd., Thane, it is seen that under schedule 6 – investment for 1994-1995 as well as schedule – 9 investment long term for 1999-2000, it is mentioned that M/s Tekson Ltd., Thane, hold 75,000 equity shares of Rs. 100 each totally valued at Rs. 75 Lakhs of their subsidiary company M/s Teksons Cooling Systems Pvt. Ltd., Jamshedpur. On going through the balance sheet for the same period of M/s Teksons Cooling Systems Pvt. Ltd., Jamshedpur, it is seen that their paid up share capital (shedule-1) as on 31.3.2000 is Rs. 1,05,00,300 (105003 equity shares of Rs. 100 each paid up fully). Thus, it is clear that M/s. Tekson Ltd. Thane, are holding more than 70% of paid up equity share capital of M/s. Teksons Cooling Systems Pvt. Ltd., Jamshedpur, and as such as per Section 4(b)(2) of the Companies Act, 1956, M/s Teksons Cooling Systems Pvt. Ltd., Jamshedpur is subsidiary company of M/s Tekson Ltd., Thane. Further in their balance sheet for the period 1994-1995 to 1999-2000, M/s. Tekson Ltd., Thane and M/s Teksons Colling Systems Pvt. Ltd. Jamshedpur, they have themselves declared them as subsidiary/holding Company of each other. So it is clearly established that M/s Teksons Cooling Systems Pvt. Ltd., Jamshedpur is a subsidiary company of M/s Teksons Ltd., Thane and M/s Tekson Ltd., Thane is holding company of M/s Teksons Cooling Systems Pvt. Ltd., Jamshedpur during the relevant period that is during 1994-1995 – 1999-2000. The period in dispute involved in the present case is from February 1996 to March 2000.
4. In view of the aforesaid provisions, the Department has calculated the short payment of duty as given in Annexure ‘A’ to the show cause notice following the Board Circular No. 257/91/1996-CX, dated 30.10.1996.
5. The appellant has relied on the various decisions such as Atic Industries, 1987 (17) 523 (SC), Dawn Apparels Ltd. v. UOI, , International Computer India Manufacturing Company Ltd., 1989 (44) ELT 287 (Tri.) vis-a-vis other decisions which have been clearly distinguished by the Commissioner in the impugned order. The Commissioner has clearly found the appellant to have contravened the provisions of the Act and the Rules and has correctly assessed the duty and rightly imposed the penalty as mentioned in the impugned order.
6. The appellant Shri V. Sunder Raj has submitted a written submission inter alia stating that he was an employee of the company and was not deriving any benefit out of the commission or omission. Besides he has also relied on the decision in the case of Z.U. Alvi v. CCE, Bhopal, 2000 (117) ELT 69 and has referred to the following para:
“Appellant has been proceeded against as on employee of BHEL. A reading of the impugned order would show that the appellant was responsible for effecting payment of Central Excise duties to the Government which was payable by BHEL. So the Commissioner appears to have proceeded against the appellant to impose penalty on account of his misfeasance and malfeasance as an employee of BHEL. Appellant as an employee could not have an existence independent of BHEL as far as Central Excise law is concerned. Appellant was only an employee of BHEL. He was not the person in-charge or was responsible for the conduct of the business of BHEL. Rightly the Commissioner has not proceeded against the appellant as a person who was in-charge and responsible for the conduct of the business at the time when BHEL committed default in paying the duties as adjudicated upon by the earlier orders. Commissioner proceeded against the appellant under Rule 209A, which can apply only to a person who dealt with the contraband article, not as manufacturer. Appellant had no dealings with the contraband article otherwise than in his official capacity as an employee of BHEL, the manufacturer. So, by no stretch of imagination can the appellant fall within the purview of Rule 209A of the Central Excise Rules. Therefore, the Commissioner was clearly in error in thinking that penalty contemplated by Rule 209A could be imposed on the appellant who was only an employee of the manufacturer, namely BHEL.”
7. The finding of the Commissioner with regard to Shri V. Sunder Raj is recorded in para 57 of the impugned order which is reproduced as under:
“Shri V. Sunder Raj, Admn. Manager of M/s. Teksons Ltd., Thane is the person looking after Central Excise matters of the company and is also the authorized signatory of Central Excise matters of the company. He has been handling central Excise matters for the company for a long time and therefore was well aware of the provisions and procedures of Central Excise Laws and also the consequences in the event of not properly following the Central Excise Laws and not discharging appropriate payment of duty. Therefore, it is evident that the under-valuation resorted to by him is with consent the knowledge of Director, Shri V.T. Dolwani and therefore responsible for aiding abetting the evasion of Central Excise duty in the instant case and thus has played an important role in aiding and abetting the evasion of Central Excise duty. Therefore, the said Shri V. Sunder Raj in connivance with the Company Director Shri V.T. Dolwani, concerned himself with transporting, depositing and dealing with disputed goods which he had reason to believe were liable for confiscation. The said Shri V. Sunder Raj is also liable for penalty under Rule 209A of Central Excise Rules, 1944.”
8. Thus, it may be seen from the above that Shri V. Sunder Raj can hardly claim the protection of the aforesaid decision of the Tribunal when he was looking after the excise matters of the company as well as the authorized signatory in exercise matters. Being a qualified person it cannot be said that he is an innocent person. Moreover, ‘ignorance of law’ is no excuse. Therefore, we do not find that he is not responsible for under-valuation and thus evasion of the Central Excise duty. However, since he has left the company and claims that he is not in regular employment somewhere-else but doing the work on adhoc basis, we can only take a sympathetic view for him and we accordingly reduce the penalty imposed on him from Rs. 3 lakhs to Rs. 1 lakh. Except the above, we do not find any reasons to interfere with the order passed by the Commissioner. We, therefore, dismiss the appeals filed by the appellants.